Foreign Challenge

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Today's IT leaders are finding it increasingly difficult to bury their heads in U.S. soil. Even domestic companies are finding offshore partners or are testing the waters of emerging overseas markets -- or they soon will. And multinationals that already span the globe are increasingly reining in decentralized IT operations and striving to create a portfolio of global IT standards and applications that also accommodate local variances.

So check the pockets of many of this year's Premier 100 IT Leaders, and you'll likely find an updated passport: Nearly half of them report that they're managing global operations that span time zones, continents and cultures.

"Even if you're not responsible for facilities and operations in other parts of the world, you still need a global perspective because so many processes that enable the business are often outside the U.S.," says Shawn Banerji, executive director of Russell Reynolds Associates Inc., a New York-based executive search firm that helps companies locate global IT talent.

And heading global projects, Premier 100 IT Leaders have found, means facing challenges that are very different from those at home. Just ask Fred Danback, vice president of global technology at Stamford, Conn.-based XL Global Services Inc., which provides IT services to XL Capital Ltd., a large Bermuda-based financial services company. Through a flurry of acquisitions, the company now operates in 29 countries.

A Project of Epic Proportions

In 2001, XL Global began creating a shared services infrastructure for XL Capital's distributed IT functions. But building a cross-continental infrastructure is a huge endeavor, given the variety of legal systems, business rules, social cultures and economic climates involved. Moreover, because XL Capital had grown through acquisition, the individual units were still aligned with their own business models. With 17 different IT organizations, "it was a very politically sensitive environment," Danback says.

Bill Regehr

XL Global's Fred Danback encountered a "very politically sensitive environment" when building a cross-continental infrastructure.

Photo Credit: Giorgio Palmisano

Those sensitivities came to the fore when Danback's group began creating a portfolio of applications and technology standards. From the outset, it found just a small number of de facto standards, such as Microsoft Office, that were already in use by most of XL Capital's businesses. To develop further standards, the group gathered senior IT representatives from around the world to collect input. But as the representatives returned home to impose the agreed-upon standards, it soon became clear that a decision made by consensus didn't always fly if the messenger didn't buy into it himself.

"Say we decided on Microsoft Exchange for a global e-mail standard. Well, the people who had argued for Notes would go back to their bosses and say, 'Here's what happened,' and it would work its way through to the business leaders with a negative spin, until we were told, 'You're absolutely not changing our e-mail system,' " Danback explains.

Lesson learned: No IT buy-in, no business buy-in. So for the next standards-setting meeting, Danback's group invited representatives at the CIO level. "If you have a strong, powerful CIO who didn't like what we were doing, he had much more influence over the local business than we did," Danback says. "It was clear that while many decisions were technical, they required executive-level participation."

Culture Clashes

It's important to realize that all these negotiations happen among people from different cultures whose rules you need to understand to be effective, Danback says. For instance, the culture in the Asia-Pacific region discourages people from showing dissent even if they disagree. "You need to be assured you've got real buy-in and that it's not superficial," Danback says.

Cultural issues also arose when Danback's group implemented XL Capital's global e-mail system. This entailed establishing a universal identity management system, which meant replacing seven naming standards that were based on local cultural conventions. For instance, in places such as South America, a person might use five names -- his first and middle names, plus a parent's middle and last names.

The answer was to create a user identification number -- which turned out to be unpopular with certain segments of users. "It was considered impersonal in Latin America and certain parts of Europe, where people like to have a personal identity when they log onto their systems," Danback says. IT tweaked the system so that once a connection is established, an employee is greeted with a more personal screen name. With this change, which has also enabled simplified sign-on and identity management, the system garnered an 86% approval rating in an intranet poll that Danback's group conducted.

So far, in addition to the e-mail system, a single-carrier global network, and global partnership agreements with Microsoft Corp. and Hewlett-Packard Co., Danback's group has also established a portfolio of 50 global technology standards, as well as a technology architecture reference guide that's used by all of XL Capital's IT groups.

'Not in This Country!'

Global negotiations are also a big part of the job for Jay Crotts, CIO in the lubricants and business-to-business segments of Royal Dutch Shell PLC, which has operations in North America, Latin America, Europe, Asia and Africa. Like Danback, Crotts has been helping his company create a global portfolio of IT applications as part of a three-year effort to standardize Shell's business processes around the world. The goal is to pare down some 500 applications to a standard set of 50.

Obviously, the applications have to accommodate local business laws and practices. But because they will be centrally hosted in multiple data centers around the world rather than on individual countries' servers, it's imperative that the company develop a change-control process that determines which customizations are really needed. Once vetted, those changes get incorporated into the base application. "You've got to take the local tweaking out, or you don't have a consistent application anymore," Crotts says.

But people find it hard to distinguish between the business norms that must be accommodated for fiscal or legal reasons and the tweaks they merely want to be included because that's how they're used to operating, he says. "They'll throw up many reasons why [an application] won't meet their business requirements, but after engaging them in a discussion about it, you find you can resolve the problems with some small modifications," Crotts says.

To successfully negotiate these issues, he says, you really need to dig into understanding the nuances of international laws, such as how taxes get calculated or -- on an even more granular level -- which countries accept only cash payments or allow only legal business owners to make payments for delivered goods.

Those who wish to lead a global IT organization are best off gaining international experience ahead of time, says George Coulter, CIO at The AES Corp., an Arlington, Va.-based company that generates and distributes electric power to 27 countries on five continents.

As the company's first CIO, Coulter is helping AES transform itself from a decentralized company with very few sophisticated IT systems in place to a company with hybrid centralized/ decentralized operations supported by a common IT platform across two data centers running common business processes.

One of Coulter's challenges has been to find CIOs to handle localization issues in all 130 of AES's businesses -- not an easy task in places such as Ukraine, Kazakhstan and Cameroon. It requires a global search, often for expatriates who want to return to their native countries.

Another challenge has been to create two collocated, outsourced global data centers in Virginia and London, into which each country's systems connect via a WAN or a virtual private network, replacing 10 large data centers and 120 smaller ones. All systems operating in the businesses use common components and a common infrastructure, based on HP blade servers running SAP ERP applications on Linux. The dual-data-center model enables load balancing using F5 Networks Inc.'s Big-IP and disaster recovery via Oracle Corp.'s DataGuard in combination with Real Application Clusters. "We consider it to be one data center in two locations," Coulter says. Application development is all done in India.

All countries will share common SAP templates, allowing for individual businesses to make tweaks for local variances, particularly to meet country-specific regulations. "In some of our businesses, like in Brazil, the regulator gives you a 48-hour deadline to make changes, so there's high volatility, and the local businesses need to respond quickly," Coulter says.

While the infrastructure is now complete, and the billing and customer-care modules are coming online, there have been plenty of localization issues to tackle. For instance, SAP doesn't support the Ukrainian language, so Russian was substituted. Attitude Is Key

Coulter attributes AES's success to its "steady as you go" approach. But he doesn't think he could have played a role in these achievements without his global moorings from previous jobs at Racal Electronics PLC, PepsiCo Inc., Citibank and other companies.

"If you haven't played in the international arena, you'd be absolutely lost on the IT side," he says. In addition to dealing with various cultural issues, "technically there are a lot of things we take for granted domestically," Coulter says. "We've had to push the envelope, particularly on the network side, to get things done."

That's why it's important for companies to develop programs to prepare their IT leaders for an increasingly global world, says Jory Marino, managing partner at Heidrick & Struggles International Inc., an executive search firm in New York. "Companies that want to develop global CIOs will give leaders global experience, either through moving someone abroad or simply challenging them to work on global teams," Marino says. "It's not something that's innate, and corporations with a strong viewpoint on leadership development will develop experiences to offer individuals willing to rise to the occasion."

Brandel is a Computerworld contributing writer. Contact her at marybrandel@ verizon.net .

Special Report

2006 Premier 100 IT Leaders

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Copyright © 2005 IDG Communications, Inc.

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